Claim Your Assets or States Will

November 19, 2003

Each year, millions of people lose track of money tucked away in stocks, mutual funds and insurance policies, which are eventually turned over to the states as unclaimed assets. Traditionally, states can take these assets if the company that manages the money can't find the owner. Now states' are claiming demutualization proceeds -- compensation that investors are owed when insurance companies convert from being mutual companies to stock companies.

Just this year, 18 states have passed laws to accelerate the collection of demutualization proceeds while four states have proposed laws that are now pending:

Pennsylvania expects to collect more than $90 million from about 300,000 dormant accounts if proposed demutualization legislation is passed.

Massachusetts took in more than $90 million during the most recent fiscal year as a result of new legislation that allows it to collect funds three years after demutualization.

California estimates that it could collect $80 million over the next two years as a result of legislation passed this summer.

States are now passing legislation to start the clock ticking on the date of the last "owner-initiated" activity. In many cases, states have shortened the dormancy periods from seven years to five years; by 2005 half the states will have three-year dormancy periods.

State treasuries, which hold an estimated $22 billion in unclaimed assets, have come to increasingly rely on these funds to fill budget gaps. They typically return about 20 to 25 percent of the assets, the rest of the funds are placed in the state's General Fund and used in state programs.